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The walking dead: Saab's revival plan

Saab has been through hell on the road to bankruptcy, and now it's being revived by an unlikely Chinese/Japanese consortium that wants to build electric cars. The odds are still daunting, but there are some intriguing synergies at work here.

SAAB STORY: The ePower 9-3 had a range of more than 120 miles. (Photo: Saab)

If I were a betting man, I’m not sure I’d be putting down money on the resurrection of Saab this time around. I’d love to see it, because this quirky Swedish car company long ago won my heart. Born of aircraft engineering! Ignition keys on the floor! Green credibility through biofuel and electric car test runs! I covered the latter extensively in my book, "High Voltage."

Alas, Saab went bankrupt, but like the zombies in "The Walking Dead," it won’t stay down. It’s staggering around now, but a blow to the head could bring it down. The basic premise is this: National Electric Vehicle Sweden (NEVS), owned 51 percent by Chinese-born Swedish citizen Kai Johan Jiang’s National Modern Energy Holdings, has bought at least some of Saab’s remaining assets — specifically the 9-3 and the next-generation PhoeniX platform.

The plan, NEVS said in a Trollhattän, Sweden, news conference, is to build electric cars, initially just for the Chinese market. Does that make any sense, given that the cost of making cars in Sweden is far higher than in China, and that’s before the long-range shipping costs? Maybe it doesn’t, but any out-of-bankruptcy plan that didn’t include production in Sweden would never have gotten off the ground with the company’s receivers. Peter Asp, director of information services for the city of Trollhattän, told me, “We’re happy that the sale is finally through and hopeful that it will be good in the long term for both Saab and Trollhattän.”

The Saab brand name is still in dispute, and the sale doesn’t include any of the General Motors-based cars, such as the 9-5 at right. Japanese investors have a minority interest, and a former Volvo Truck executive, Karl-Erling Trogen, is the chairman. With that background, it’s intriguing to speculate whether the new owners will tap into the intellectual property they ostensibly already own. Saab had created an ePower division that planned to field 70 electric 9-3s in Swedish tests. The American battery supplier was Boston-Power, but that company is headed by the Sweden-born Christina Lampe-Onnerud, who knows all the players here.

Edmunds.com senior green car editor John O’Dell tells me, “It’s no coincidence that Saab already had developed a 9-3-based EV before its chronic financial woes caused its collapse last year. The Saab ePower was a joint development of the Swedish automaker, the Swedish Energy Agency and the country's electric industry trade association, called Power Circle, along with U.S.-based battery maker Boston Power, and Sweden’s Electroengine AB, a battery management systems provider. All of that technology is just sitting in a warehouse now. By acquiring Saab, the National Electric Vehicle Sweden consortium could get a big head start in the EV business.”

Or the tech could stay in the warehouse. Mikael Östlund, NEVS’ spokesman in Sweden, told me, “Production will be based on market demand. We’re excited at the opportunity, because we plan to combine Swedish engineering and manufacturing skills with Japanese electric vehicle technology and expertise in the Chinese market.” He couldn’t tell me what would become of the ePower technology, which looked very promising. Lampe-Onnerud told me she’s watching the whole thing with interest, but isn’t directly involved. “It’s very early, but we will see what happens,” she said. Indeed we will. Here's some relevant video:

The Saab name attached to an electric vehicle makes sense. Selling the cars in Europe might be a no-brainer. But the European market for EVs is (inexplicably, given how green they are over there) very soft. In 2011, only 11,500 were sold there. In Denmark, with great incentives, only 900 have been purchased to date. In Portugal, they put in 1,300 charge stations and sold 200 cars. Some 3,000 Leafs have been sold in Europe, less than a third of the U.S. sales. Blame it on the ubiquity of high-mpg diesels, poor public education on EVs, and high prices for the cars. I hear that Iceland has finally removed the value-added tax (VAT) from EV imports, so maybe that’s where sales will take off first.

So can plan B, selling EVs to China, work out? Maybe, especially because the Chinese government is determined that the world’s biggest auto market plug in, and it has the influence to make it happen. And those high production costs? O’Dell says, “The ability to use existing Saab facilities and tooling might offset higher labor costs.” But former Saab executive Steve Rossi says he's skeptical of the business plan. "If they produce a car, it won't be a Saab," he said. "Even the last cars they did produce weren't Saabs."

My efforts to contact Jiang directly were unavailing, though I had a series of exchanges with his secretary. He’s an intriguing guy, with, as the Associated Press points out, “close ties with China’s State Grid electricity utility.” His other company. National Bio-Energy Group, builds bio-fuel plants that run on farm waste (including straw and corn stover). The power goes into government-controlled power utilities. Östlund told me, “He’s well connected.” And in China, that’s ultra-important.

The Truth About Cars has reservations about Jiang, but he's very likely the only credible bidder for the company's assets. Everybody else has written Saab off, so it seems to me that Jiang is the man of the hour.

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